Cup runneth over as brewer departs

By DITA DE BONI

Lion Nathan looks set to ride out of New Zealand with the golden glow of strong operating margins and revenue growth in the six months to February.

Yesterday the company revealed pre-tax earnings were up 12.3 per cent to $219.9m in the half year, on revenues of $1.13 billion, up 15.6 per cent. Bottom-line profit rose 17 per cent to $97.1 million.

The consolidation of New Zealand Wines & Spirits contributed $47.3m to the interim revenue tally.

Cashflow from operations grew 61 per cent to $231.5m.

A static three-year final dividend of $NZ.16c will become $A.16c post-migration, offsetting the New Zealand shareholders' loss of imputation credits. An interim dividend of 8c will be paid on May 31.

Chief executive Gordon Cairns stressed the company would complete the transition from "old fashioned brewer" to "total service provider", and emphasised the importance of e-commerce.

Gains in the Australian market spearheaded the results, with Lion reporting increased market share in the largest state markets, New South Wales and Victoria.

Despite relatively flat Australian volume growth of 1 per cent -- blamed on unseasonal weather on the eastern seaboard -- pre-tax earnings there gained faster than both volume and revenue to $A152.5m, up 7.5 per cent.

Over-all Australian market share grew 0.5 per cent. Lion aims to grow its Victorian market share -- 12.6 per cent as opposed to the nationwide market share of 41.6 per cent -- with premium pricing and the roll-out of its $A100m investment plan.

The aborted joint venture between Cadbury Schweppes and Coca-Cola in Australia had also freed up Lion to pursue a deal to divest Pepsi Australia.

Market share in New Zealand remained static over the six-month period, but revenues grew 8.1 per cent to $284.9m and pre-tax earnings were up 5.3 per cent to $53.7m.

Marginal growth in the New Zealand beer market over all was due to premium brands finding favour through supermarkets, millennium celebrations and the America's Cup.

"Supermarkets have been an opportunity to appeal to new customers, mainly housewives," Mr Cairns said.

China operations reported flat revenue - $13.5m compared with last period's $12.7m - but improved losses to $19.9m ($20.4m) were due to cost reductions and success with premium beers.Questioned over Lion's re-entry into the hotel business in Victoria, after Lion vowed three years ago to avoid going back into hotels, Mr Cairns said: "I changed my mind."